Written by Bjork on January 28th, 2009

Andrew Bjork

Men are not so different one from another.  However, the difference in men lies in the path or direction that each takes in the road of life.  Capitalism, as taught by Adam Smith, is one way of protecting natural freedoms and gives every citizen the ability to select personal preferences.  Adam Smith writes that, “the most dissimilar geniuses are of use to one another; the different produces of their respective talents, by the general disposition to truck, barter, and exchange, being brought, as it were, into a common stock, where every man may purchase whatever part of the produce of other men’s talents he has occasion for.”  The advantage of such a system is that it occasions a society that indirectly promotes altruism, while allowing each individual to look after his own desires.  Capitalism plays upon the self-interest of the individual for the benefit of a society as a whole.

How does this play into to price and labor?  Well if capitalism depends on the interaction of individuals looking after their own self-interests, then there must be a means to calculate the worth of the things men desire.  By weighing the opportunity cost of an item in relation to the labor needed to obtain that item, citizens are able to best accommodate themselves with the time that they have.  They tend to use that time more efficiently, because they know that there is a means to achieve the goal they desire.  Their freedom is given full freedom within the boundaries that are allowed by the free market.  It is just as Smith declares, “Labor, therefore, it appears evidently, is the only universal, as well as the only accurate measure of value, or the only standard by which we can compare the values of different commodities at all times and at all places.”

 

 

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